Many individuals apply for a new secured loan to pay off an existing mortgage loan (same property). Market interest rates would typically influence the decision as to whether or not to pursue refinancing for an existing mortgage. Under certain circumstances, refinancing may be able to save you hundreds or even thousands of dollars every year. Imagine what you could do with those extra savings every month.
The most important consideration while deciding on whether or not to refinance and use a second loan to pay the first would depend on how much money you would save in the process. If the savings are higher and the interest differential is encouraging then you may want to explore the refinancing option further.
Well, it is not just about the interest rates, you may actually end up paying less in monthly mortgage payments, lower your mortgage loan's term, alter repayment options, opt for more favorable terms (e.g. fixed vs. variable or vice versa), consolidate debt, or even cash-out with extra cash.
The main downside to refinancing your mortgage is that you might have to pay high closing fees depending on how your lender's refinancing program is structured.
Overall, you must calculate the differentials by using spreadsheets or a comparison to chart to make an educated decision as to whether or not to refinance your mortgage loan.
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